Some three years in the making, the redevelopment of the former Saks Fifth Avenue department store in Downtown is ready to move ahead.
Pittsburgh Urban Redevelopment Authority board members are expected to vote today to sell the Smithfield Avenue site to Smithfield Oliver Partners LP for $2.2 million.
The sale comes about three years after the URA acquired the building for $4 million after the store closed. Also included in the sale to Smithfield Oliver are a former Wendy’s restaurant and a vacant lot on Fifth Avenue.
With the transaction, Smithfield Oliver, a partnership between Millcraft Investments and McKnight Realty Partners, will begin razing the store and the restaurant to make way for a 570-space parking garage and street level retail in a $35.5 million first phase and up to 100 residential units in a second phase.
Lucas Piatt, Millcraft president and chief operating officer, said he expects the demolition to start within the next month after Smithfield Oliver closes on the properties.
At its meeting, the URA board also will consider a $7 million loan to help finance the garage and the infrastructure to support the seven-story tower to be built above it.
The loan would be paid back by diverting 75 percent of the parking tax revenue generated by the garage. The URA would own the air rights above the garage.
Kevin Acklin, URA board chairman and chief of staff to Mayor Bill Peduto, said that in exchange for the loan, the administration insisted that Smithfield Oliver start construction of the residential units within the next two years.
It also demanded “personal guarantees” from Millcraft and McKnight that the money would be repaid if the housing isn’t built in accordance with the timetable or if the garage is sold before the residential construction.
“At the mayor’s request, the days of throwing taxpayer money at structured parking garages without a return on such investment to the city taxpayers are over,” Mr. Acklin said in an email.
Mr. Piatt said the development team hopes to “roll right into” the residential construction as it completes the garage and retail space. “At the end of the day, we envision this as one extended project,” he said.
Smithfield Oliver had been planning to construct 77 condos at the Saks site, but now may erect apartments.
“We haven’t made a clear decision yet. Our goal is to deliver a residential component to the market in a timely fashion, and apartments allow us to deliver to the market more quickly, although we do feel there is a demand for condos at this point,” Mr. Piatt said.
Depending on what Smithfield Oliver decides, the number of units could range from 50 to 100.
The developer has lined up Fogo de Chao, a Brazilian steakhouse, to occupy about a third of the 30,000 square feet of retail space. It has signed a letter of intent with another restaurant Mr. Piatt would not name. About 3,000 square feet of retail remains available.
Smithfield Oliver is starting the project just as another department store, Macy’s, is preparing to close its doors less than a block away next month to make way for a residential, hotel and retail redevelopment.
Mark Belko: mbelko@post-gazatte.com
First Published: August 12, 2015, 5:14 p.m.
Updated: August 13, 2015, 1:42 a.m.
